The Solo Coal Mine is the only employer in the small town of Way out there.The market supply of coal miners is Q^s = 0.02W - 400,where W is the annual wage of a coal miner and Q is the number of people who would accept employment as a coal miner.What is the coal mine's marginal expenditure when it hires 150 coal miners?

Question

Quizplus · Accepted Answer

The supply equation is Q^s = 0.02W - 400. Solving for W when Q = 150 gives W = 27,500. The marginal expenditure is the change in total expenditure when hiring one more worker. The derivative of the inverse supply function W = 50Q + 20,000 gives the marginal expenditure as 50Q + 35,000. Substituting Q = 150 gives a marginal expenditure of $35,000.

The Solo Coal Mine Is the Only Employer in the Small